Site Mobile Navigation

No Money for a Living Wage? But Fat Abounds

Everyone knows what marbled steak looks like, with the streaks of fat running through the red meat, right in front of your eyes. The marbled public works project is harder to recognize, but it most certainly exists.

Take, for instance, a sports stadium that was built with vast sums of taxpayer money. Naturally, boilers were needed. Five companies bid for the work, but the lowest bidder did not win. Instead, the runner-up, backed by a City Council member, got the contract, which ended up being worth more than $275,000.

Subsequently, the head of the boiler company signed 10 checks, for a total of $50,000. All were paid to the council member’s political club or to the council member personally. The council member himself is said to have filled in the signed checks with the amounts and the payees.

Now the fat here, even though it involved Yankee Stadium, may not be staring you in the eye like a cut of prime sirloin in the supermarket display case. In the scheme of things, the boiler deal was barely a rounding error, less than two-hundredths of 1 percent on a $1.5 billion construction project. And it’s likely that no one outside of a few inside players would have known about it had the City Council member involved, Larry B. Seabrook of the Bronx, not been brought to trial on corruption charges.

Still, it is instructive: Even that tiny project was marbled with enough fat for a politician to get a $50,000 taste. Members of the City Council and the mayor are now debating legislation that would require what is called a “living wage” of $10 per hour, plus benefits, for people who work at developments that have received more than $1 million in public subsidies. If the employers do not include benefits, then the hourly wage could be no lower than $11.50.

The Bloomberg administration has argued that the bill would hurt the very people it is meant to help. Incentives are given to projects that would not proceed otherwise, Tokumbo Shobowale, the chief of staff to the deputy mayor for economic development, told the Council last week, and the living wage requirements would erode their value — meaning that the developments would not get built.

The mandates thus “do not redistribute the financial benefits of incentives from developers to workers,” Mr. Shobowale said. “They take benefits from some lower-wage workers and give them to others.”

It is not entirely clear why that would be so; examined rigorously, these projects are not universally lean. For instance, the $50,000 that was loosened from the boiler contract to the possible benefit of Mr. Seabrook could have paid a worker the difference between the minimum wage of $7.25 and the living wage of $11.50 for nearly six years.

Still, the living wage debate is a broken one.

Since 1990, the portion of low-wage workers in New York City with some college education has increased by 70 percent, but wages for low-income workers as a whole have declined by 8 percent, according to the Fiscal Policy Institute, an economic research organization that supports the proposed law. In 1990, those at the bottom were paid $10.85 an hour, adjusted for inflation; last year, it was $10. No one doubts that the city’s economic life is skewed.

“We live in one of the most prosperous cities in the history of the world, and yet far too many New Yorkers live below or dangerously near the poverty line,” Mr. Shobowale said in his testimony.

Over the last year, the Council bill has been changed so much that it most likely would have covered no more than five or six development projects a year from 2002 to 2008, according to testimony from George Sweeting, the deputy director of the city’s Independent Budget Office.

Mr. Shobowale, in his testimony, said that more radical approaches that have been taken in other cities would not be as harmful as the Council proposal.

“San Francisco, for example, has enacted a citywide minimum wage, which — while covering a greater number of people — has the benefit of not creating a ‘checkerboard’ effect, and impacting only certain projects or neighborhoods,” he said.

In fact, the minimum wage set by San Francisco will be $10.24 in January, along with mandatory contributions to health insurance funds.

In New York, a far more modest proposal has become the occasion for high-profile soul-searching and head-scratching by the mayor and the City Council speaker. And forget the steak: this is a mighty battle about crumbs for a few people.

E-mail: dwyer@nytimes.com

Twitter: @jimdwyernyt

A version of this article appears in print on November 30, 2011, on page A28 of the New York edition with the headline: No Money for a Living Wage? But Fat Abounds. Order Reprints|Today's Paper|Subscribe